The manufacturer has already recalled more than 8,200 tons of the tainted formula following reports of babies developing kidney stones, Xinhua said. Sanlu Group, one of China's leading dairy producers, has also sealed off more than 2,100 tons of contaminated product and another 700 tons still need to be recalled, the news agency said.

Chinese police have questioned 78 people -- including dairy farmers and milk dealers -- about the contamination, a Chinese official told Xinhua earlier Saturday. Sanlu would not say whether its own employees are being investigated, Xinhua said.

Testing by Sanlu found tripolycyanamide, also known as melamine, in 700 tons of its product, the news agency reported.

Zhao told the news agency that the suspects added water to the milk they sold to Sanlu to make more money, then added the chemical so the diluted milk could still meet standards.